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Worldwide bidding battle sparked for Spencer's broking giant Nex

The founder of Nex Group, Michael Spencer, could be in line for a £650m payout if predictions of the sale price are correct - TMG/TMG
The founder of Nex Group, Michael Spencer, could be in line for a £650m payout if predictions of the sale price are correct - TMG/TMG

A global bidding war is set to erupt for Nex Group, the financial technology giant created by City veteran ­Michael Spencer more than 30 years ago with two friends and a single trading screen.

A takeover approach from the owner of the Chicago Mercantile Exchange (CME) has sparked a frantic scramble among other exchanges, which were wrong-footed after it pounced as the industry held its annual jamboree in Boca Raton, Florida.

The bosses of the world’s largest ­exchange groups and Mr Spencer were at the event, but the CME’s chief executive Terry Duffy was not.

He is well known for keeping a low profile, despite heading the world’s largest exchange operator by a sizeable margin.

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Talks between Nex and CME are at an early stage. Competitors will be desperate to prevent the pair coming together. The CME Group is a derivatives powerhouse valued at $56bn (£40bn) and a combination with Mr Spencer’s company would be an industry game-changer, creating a trading goliath with a presence in all the major global financial markets.

The Chicago Mercantile Exchange - Credit: Reuters/Reuters
The Chicago trading floor of CME Group, which is understood to be in talks to snap up Nex Group Credit: Reuters/Reuters

CME dominates US government debt trading, while Nex operates some of the world’s largest foreign exchange and fixed income markets.

Senior City sources said all the big players were rushing to work out whether they could gatecrash the talks with a higher offer. The favourite to turn interloper is the Intercontinental Exchange, parent of the New York Stock Exchange.

As the second largest stock exchange operator, it has the most firepower to muscle in on the talks and will not want to see the gap between itself and the CME widen any further.

Investment bankers said private equity giant Blackstone was considering whether to weigh in. It recently bought the data arm of Thomson Reuters in a $17bn deal to supercharge the fight against arch-rival Bloomberg. Adding Nex, which has electronic trading platforms with massive market data, would be a huge boost in that battle, they said.

The London Stock Exchange - Credit: Leon Neal/AFP
The London Stock Exchange could struggle to launch a counter-bid given it has been without a chief executive since Xavier Rolet's November exit Credit: Leon Neal/AFP

The London Stock Exchange, Germany’s Deutsche Boerse and Singapore’s stock exchange are also expected to study their options carefully.

However, the LSE may struggle to mount  a serious challenge as it has been  without a chief executive since the dramatic departure of Xavier Rolet last November.

Mr Spencer stands to make a large fortune from any sale. He owns 17pc of Nex, worth £560m at Friday’s share price of 870p.

However, analysts have speculated that any bidder could end up having to pay as much as £10 a share to buy the company. At those levels, Mr Spencer’s stake would be worth £650m, a princely sum for a firm he founded with friends in a tiny office.

Sources close to the talks said a tie-up with CME was unlikely to face the same hurdles that have scuppered stock exchange mergers in the past, as it would bring together a traditional ­exchange with a specialist in electronic trading in over-the-counter markets.  Nex declined to comment.